The most expensive part of the American economy — our healthcare system — has operated in secrecy for decades. The real prices for healthcare have sat inside systems that no outsider can see.
At his State of the Union address, President Trump put the industry on notice. He demanded maximum price transparency. It’s a simple proposition: Americans pay the highest healthcare bills in the world. They deserve to see exactly where that money is going.
The president rightly called out successes in the area of prescription drugs. It has been a long-accepted, unchallenged practice that Americans will pay more than patients in peer nations. The Great Healthcare Plan and TrumpRx have challenged that assumption, and most-favored-nation pricing has narrowed the gap.
However, global benchmarking for a handful of medications only spreads to the rest of the market if real domestic prices are also visible. List prices are not enough. Not in a system where middlemen always find a way to get their cut, through machinations that seem unlimited. Americans know we are overpaying, but we don’t know if that’s a reflection of international disparities, domestic intermediaries, or some combination of both. If maximum price transparency is going to be more than a slogan, we need action such as the proposed Pharmacy Benefit Fee Disclosure Rule.
When the president spoke about insurer profits, he wasn’t talking about the 3 percent margins that their company CEOs claim. He was calling out the reality that a few behemoths have taken over as vertically integrated corporations that own every part of the delivery system, from insurers to pharmacy benefit managers to pharmacies. The shell game that has resulted highlights the transparency gap.
Employers and families see higher premiums, narrow networks and prior authorization hurdles. At the same time, insurance companies report only the slimmest profits. What no one outside the system sees is how dollars are distributed across all the affiliated entities, each quietly pocketing its share. The largest carriers generate billions in operating earnings annually — their profits are not in question, but the economic architecture underpinning the system remains invisible to the people who are paying for it.
Maximum price transparency means exposing the full chain of transactions attached to each premium dollar as well as the chain of transactions where middlemen who service them (and often are owned by them) take their cut, not just the sliver they currently concede.
The call for expanded healthcare savings accounts flows directly from concerns about insurance companies gaming the system and unfairly profiting at the people’s expense.
Healthcare savings accounts are the consumer counterpart to demanding industry transparency. The current system tosses premium dollars — and for Obamacare plans, taxpayer subsidies — into pools that feed into large enterprise systems that determine pricing, coverage rules and network access behind closed doors. The current sequence is for dollars to flow first to insurers rather than families.
Healthcare accounts reverse that flow. They recenter power on the individual, and away from insurance company intermediaries. Consumer control without price visibility would be cosmetic. The only way these accounts can discipline prices is if consumers can see real prices up front and comparison shop. That is why healthcare savings accounts and maximum price transparency are inseparable.
One puts money into Americans’ pockets. The other ensures that the dollars they receive are not quietly absorbed by opaque pricing structures.
The current healthcare system has asked Americans to finance a system they cannot see. The president’s call for maximum price transparency is a refusal to accept that arrangement. If healthcare is to operate as a healthy, functioning market, then every major price in the system must be visible.
Maximum price transparency is where rhetoric ends and accountability begins.